Commercial Litigation and Arbitration

RICO — Plaintiff May Base Personal Jurisdiction on RICO’s Nationwide Service of Process Provision (18 U.S.C. § 1965(b)), Only If Plaintiff States a Colorable RICO Claim

Courboin v. Scott, 2014 U.S. App. LEXIS 22775 (11th Cir. Dec. 1, 2014):


When analyzing a dismissal for lack of personal jurisdiction, "we first determine whether the applicable statute potentially confers jurisdiction over the defendant." Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 942 (11th Cir. 1997). Jurisdiction over a non-resident defendant may be based upon a federal statute or a state long-arm statute. If a basis exists for exercising jurisdiction, we "then determine whether the exercise of jurisdiction comports with due process." Id.

We have held that there is a potential statutory basis for personal jurisdiction under RICO because the statute provides for nationwide service of process. Id.; see 18 U.S.C. § 1965(d). ***

1. RICO Claims

Despite the fact that RICO contains a nationwide service-of-process provision, Courboin is entitled to take advantage of it only if his "asserted federal claim is not wholly immaterial or insubstantial." Republic of Panama, 119 F.3d at 941-42 (stating that, under RICO and other statutes with nationwide service-of-process provisions, a court "should dismiss for lack of jurisdiction only if the right claimed is so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise devoid of merit as not to involve a federal controversy" (internal quotation marks omitted)). In other words, whether a basis exists for exercising personal jurisdiction under RICO depends on whether Courboin has stated a "colorable" RICO claim. Id. at 942. If Courboin has not stated a colorable claim, we do not address the applicable due-process requirements.

The federal civil RICO provision "permits any person injured in his business or property by reasons of a violation of RICO's criminal provisions to recover treble [*7]  damages and attorney's fees." McCaleb v. A.O. Smith Corp., 200 F.3d 747, 751 (11th Cir. 2000) (brackets and internal quotation marks omitted); see 18 U.S.C. § 1964(c). In order to establish a RICO violation, a plaintiff must prove four elements: "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1282 (11th Cir. 2006) (quotation marks omitted); see 18 U.S.C. § 1962.

In his complaint, Courboin alleged the following: (1) his ex-wife's attorney, Scott, hired a business appraiser, Barson, who charged an exorbitant rate; (2) Scott hired a real-estate appraiser, Smith, who used an outdated form, charged 60% more than Courboin's appraiser, and did not advertise in the phonebook; (3) Courboin's attorney, Jensen, refused to cross-examine Barson on the amount of his fees, ostensibly for the tactical reason of not gaining the judge's ire; (4) Scott sent Courboin burdensome discovery requests not needed for the divorce proceeding, which Jensen charged an excessive amount to respond to and failed to challenge; (5) over $200,000 went to pay attorneys and experts in his divorce proceedings; and (6) an appraiser not affiliated with his divorce has indicated that unnamed attorneys demand a 50% cut when they send an appraisal referral.

Upon review of Courboin's complaint, we conclude [*8]  that he has not stated a colorable federal RICO claim, so he may not rely on RICO's nationwide service-of-process provision. See Republic of Panama, 119 F.3d at 941-42. First, assuming that the conduct alleged on the part of the defendants in this case was highly unethical, Courboin still has not identified any predicate acts that could constitute "racketeering activity" under RICO. The phrase "racketeering activity" is defined as including any predicate act which is indictable under a lengthy list of federal criminal offenses, including robbery and mail and wire fraud, as well as certain limited state offenses. 18 U.S.C. § 1961(1). A "pattern" of such activity is two or more related predicate acts. Williams, 465 F.3d at 1283.

While Courboin makes broad allegations of corruption and theft in the New Jersey family courts, he does not connect these allegations to any predicate act as defined by 18 U.S.C. § 1961. Nor does our review of that provision indicate any qualifying predicate act that is implicated by Courboin's specific factual allegations. See id. § 1961(1)(A)-(B). The closest match we can find appears to be federal wire or mail fraud, but Courboin alleges no mailings and no signals transmitted interstate by wire, as required by 18 U.S.C. §§ 1341 and 1343, respectively. Robbery under New Jersey law does not work [*9]  because, among other reasons, Courboin has made no allegations of "intimidating or assaultive conduct." State v. Lopez, 187 N.J. 91, 900 A.2d 779, 784 (N.J. 2006). No other qualifying predicate acts appear even conceivably to be implicated. Thus, Courboin has not shown any "racketeering activity," let alone a "pattern" of such activity.

Courboin also did not allege any facts plausibly supporting an inference that the defendants "conduct[ed] . . . an enterprise." To show "conduct of an enterprise," a plaintiff must establish that a group of persons associated together for the common purpose of engaging in an ongoing course of criminal conduct. Williams, 465 F.3d at 1283-84.

While Courboin asserts that the defendants' goal was to steal money, at most, his allegations support a claim that (1) Barson and Smith overbilled his wife, (2) Courboin disagreed with Jensen's tactical choices, and (3) Scott and Jensen performed work that Courboin thought was unnecessary to Courboin's divorce. The mere fact that attorneys and appraisers interact in divorce proceedings, however, does not mean or even plausibly suggest, in and of itself, that all of the defendants were in cahoots and were conducting an "enterprise." Moreover, even if some attorneys generally demand a "cut" of appraisal fees, Courboin [*10]  has not stated any factual allegations indicating that any attorneys in this case did so. While we are certainly troubled by Courboin's allegations of unethical behavior on the part of the defendants in this case, the allegations simply do not support a colorable claim that an enterprise engaged in a pattern of racketeering activity in this case. See 18 U.S.C. § 1961(1).

Consequently, we conclude that Courboin's allegations under RICO do not rise to the level of a colorable federal controversy. See Republic of Panama, 119 F.3d at 941-42. Courboin cannot, therefore, take advantage of the nationwide service-of-process provision in RICO as a basis for exercising personal jurisdiction over the defendants. Id.

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